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Thanks for the update. You have me wondering … Why you decided to close the short position and go net long and not to more neutral position? Remember the market peaking process ... I feel it is close if not here.
As you know I am somewhat defensive at the moment while I await an anticipated pull back occurring sometime this summer or early fall (May through October). Currently, I am with a moderate equity allocation based upon my tolerance for risk at 50% equity. A conservative allocation for me would be in the 40% range and an aggressive allocation for me would be in a 60% range … so, being in the 50% range in equities I rate this as moderate. If I were to sell down much further, I would have to start reductions in a taxable account and with this I would have to deal with the payment of taxes on realized long term capital gains (no losses to carry forward) and, I would also lose a good stream of dividend income, which is currently favorably taxed at the moment.
Speaking of income, I just opened my April brokerage statement and from it’s review in comparison to the year ago statement my income is up better than 25% including short term investment activity. As you may recall in years past about 15% of my portfolio was in cash with 5% being in demand deposits and about 10% being in time deposits. I am now at about 25% cash with most of it in demand with little left in the CD ladder.
So how is my income up over the same period from a year ago? A good part of it comes from making the cash part of the portfolio more productive by buying special equity ballast positions; and, then selling them off when a set goal was obtained. Thanks Flack, for your help with the technical analysis lessons you provided on the board a few years back. However, I am now utilizing one of the virtues important for every investor that is … patience.
My portfolio’s asset allocation is one that provides me with great flexibility for varying market conditions as I am currently sitting on 25% cash, 25% income and 50% equity. Most everything I own is in some shape, form or fashion is kicking off an income stream with the exception being cash (little income here). Most that read my post know that some of it will be deployed for an anticipated return opportunity when the right set up appears in the equity market (S&P 500 Index or S&P 1500 Index). Even if I sit tight through the rest of the year with my cash and do nothing more with it I have more than doubled what I would have made off interest at the old CD ladder annual rate of about five percent. That’s right … thus far this year alone I am up better than ten percent form my special cash allocated investment profits.
I wish you well with your recent net long position … Please know I am also net long in my equities. We will see how the summer goes as I am looking for a five percent perhaps even a ten percent pullback … something bad happens … an even greater pull back ... perhaps twenty percent or more. This is why I am holding a larger cash position than normal. As Catch 22 says, we are living in interesting times.
My best to all, Skeeter
PS. I am now on an early extended vacation as I work off some of my accrued benefit time over the coming months before I retire. I will still be on the board from time-to-time but not as often. If you ping me and I don’t respond it is because I am out of pocket ... and, no where close to a computer.
Can you elaborate on "A good part of it comes from making the cash part of the portfolio more productive by buying special equity ballast positions; and, then selling them off when a set goal was obtained" Thank you
A good part of the income increase is due in large part to short term investment position profits which are taxed the same rate as interest income ... the other part, that is not mentioned, comes form an increase in dividend payments received from stocks and mutual funds as companies raised their dividends paid to share holders. Cash that had been invested in a CD ladder a few years earilier was earning close to 5% interest. As the CDs matured, I had to look for an alternative use of the cash to replace the lost interest form the CD ladder. I chose to use some of it by taking short term positions; and, as these positions reached a certain profit level I them sold them off for profit and the rest came form dividend increases from other long term holdings.
If you are looking for place to park your cash, you may consider buying a few muni private bonds. I've added cali-University enterprise and san jose airport, cusip - 914258BM9 798136TU1 @ zions direct both very good ratings. These vehicle could be good for longer term. they could be too long and you can always transfer the funds to your kids once you don't need the money anymore
Comments
Thanks for the update. You have me wondering … Why you decided to close the short position and go net long and not to more neutral position? Remember the market peaking process ... I feel it is close if not here.
As you know I am somewhat defensive at the moment while I await an anticipated pull back occurring sometime this summer or early fall (May through October). Currently, I am with a moderate equity allocation based upon my tolerance for risk at 50% equity. A conservative allocation for me would be in the 40% range and an aggressive allocation for me would be in a 60% range … so, being in the 50% range in equities I rate this as moderate. If I were to sell down much further, I would have to start reductions in a taxable account and with this I would have to deal with the payment of taxes on realized long term capital gains (no losses to carry forward) and, I would also lose a good stream of dividend income, which is currently favorably taxed at the moment.
Speaking of income, I just opened my April brokerage statement and from it’s review in comparison to the year ago statement my income is up better than 25% including short term investment activity. As you may recall in years past about 15% of my portfolio was in cash with 5% being in demand deposits and about 10% being in time deposits. I am now at about 25% cash with most of it in demand with little left in the CD ladder.
So how is my income up over the same period from a year ago? A good part of it comes from making the cash part of the portfolio more productive by buying special equity ballast positions; and, then selling them off when a set goal was obtained. Thanks Flack, for your help with the technical analysis lessons you provided on the board a few years back. However, I am now utilizing one of the virtues important for every investor that is … patience.
My portfolio’s asset allocation is one that provides me with great flexibility for varying market conditions as I am currently sitting on 25% cash, 25% income and 50% equity. Most everything I own is in some shape, form or fashion is kicking off an income stream with the exception being cash (little income here). Most that read my post know that some of it will be deployed for an anticipated return opportunity when the right set up appears in the equity market (S&P 500 Index or S&P 1500 Index). Even if I sit tight through the rest of the year with my cash and do nothing more with it I have more than doubled what I would have made off interest at the old CD ladder annual rate of about five percent. That’s right … thus far this year alone I am up better than ten percent form my special cash allocated investment profits.
I wish you well with your recent net long position … Please know I am also net long in my equities. We will see how the summer goes as I am looking for a five percent perhaps even a ten percent pullback … something bad happens … an even greater pull back ... perhaps twenty percent or more. This is why I am holding a larger cash position than normal. As Catch 22 says, we are living in interesting times.
My best to all,
Skeeter
PS. I am now on an early extended vacation as I work off some of my accrued benefit time over the coming months before I retire. I will still be on the board from time-to-time but not as often. If you ping me and I don’t respond it is because I am out of pocket ... and, no where close to a computer.
Sounds like you're really doing well. Congrats!
I hope that you enjoy your time off work and make the best of it.
Flack
Can you elaborate on "A good part of it comes from making the cash part of the portfolio more productive by buying special equity ballast positions; and, then selling them off when a set goal was obtained"
Thank you
A good part of the income increase is due in large part to short term investment position profits which are taxed the same rate as interest income ... the other part, that is not mentioned, comes form an increase in dividend payments received from stocks and mutual funds as companies raised their dividends paid to share holders. Cash that had been invested in a CD ladder a few years earilier was earning close to 5% interest. As the CDs matured, I had to look for an alternative use of the cash to replace the lost interest form the CD ladder. I chose to use some of it by taking short term positions; and, as these positions reached a certain profit level I them sold them off for profit and the rest came form dividend increases from other long term holdings.
Hope this provides the answer you seek.
If you are looking for place to park your cash, you may consider buying a few muni private bonds. I've added cali-University enterprise and san jose airport, cusip - 914258BM9 798136TU1 @ zions direct both very good ratings. These vehicle could be good for longer term. they could be too long and you can always transfer the funds to your kids once you don't need the money anymore
regards